Procurement: NI Contracts

Oral Answers to Questions – in the Northern Ireland Assembly at 2:00 pm on 19th May 2014.

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Photo of Kieran McCarthy Kieran McCarthy Alliance 2:00 pm, 19th May 2014

4. asked the Minister for Regional Development what percentage of procurement contracts signed by his Department are awarded to companies based in Northern Ireland. (AQO 6146/11-15)

Photo of Danny Kennedy Danny Kennedy UUP

Before I respond to the Member's question, I would like to remind the House that procurement legislation requires above-threshold procurements to be advertised in the European journal.  In addition, public sector procurements are subject to open competition in order to secure best value for money in accordance with the guidance in 'Managing Public Money Northern Ireland'.

In response to the question, I can advise that my Department procures the vast majority of its contracts through two centres of procurement expertise, namely the Central Procurement Directorate in DFP for supplies and services, and the Department's own centre of procurement expertise for construction-related contracts.  During 2013-14, the Department awarded 68 contracts that were procured through those centres of procurement expertise.  Of those contracts, 43 were awarded to companies that are based in Northern Ireland.  That represents 63% of the contracts awarded.  The approximate value of those contracts was almost £300 million, of which £243 million was awarded to companies that are based in Northern Ireland.  That represents 81% of the value of contracts awarded.  I can also confirm that the remaining contracts were awarded to a mix of companies from Great Britain and multinational companies that have offices in Northern Ireland.

Photo of Kieran McCarthy Kieran McCarthy Alliance

I thank the Minister for his response.  We acknowledge the details that he provided in his answer to my initial question but what steps has he taken to ensure that all procurement contracts maximise the potential for social clauses throughout Northern Ireland?

Photo of Danny Kennedy Danny Kennedy UUP

I thank the Member for his supplementary question.  Indeed, in reference to the earlier point, my Department and I are determined to ensure that social contracts and the social element of contracts that are awarded can give young and unemployed people in particular the opportunity to improve their skills and get into the job market.  The same applies, wherever possible, with these contracts, which are, of course, subject to EU legislation.

Photo of Joe Byrne Joe Byrne Social Democratic and Labour Party

Does the Minister accept that Northern Ireland has a tremendous reputation for having a lot of major construction companies, civil engineering companies and public works contractors that have done excellent work throughout these islands?  Some of them, including members of the Construction Employers Federation, are expressing frustration at how the Central Procurement Directorate is operating.  Does he agree that social clauses could help in that regard?

Photo of Danny Kennedy Danny Kennedy UUP

I am grateful to the Member for his question.  Indeed, I join him in adding my tribute, particularly to the construction industry in Northern Ireland, which, under the most difficult of economic circumstances, continues to provide employment prospects in all parts of the United Kingdom and, indeed, in parts of Europe.  Although I am pleased that Northern Ireland firms are winning contracts in other places, I would much prefer, like him, that we could award more contracts in Northern Ireland for the construction industry, either for road construction or other aspects.  That matter is raised continually when I meet members from the industry, who acknowledge the amount of work they do in Scotland, England, Wales and, indeed, the Republic of Ireland but would love the opportunity to do more work at home.  I hope that the economic conditions and moneys that can be awarded to my Department from the Executive will assist with that because that, in turn, is the secret to making real strides in the local economy to improve things.

Photo of Robin Swann Robin Swann UUP

I congratulate the Minister on the high percentage of contracts that his Department awards to Northern Ireland companies.  Will he advise what percentage of procurement contracts his Department's arm's-length bodies award to Northern Ireland or GB companies?

Photo of Danny Kennedy Danny Kennedy UUP

I am grateful to the Member for his supplementary question and, indeed, for his comments.  My Department's arm's-length bodies, Northern Ireland Water and the Northern Ireland Transport Holding Company (NITHCo), are also centres of procurement expertise.  During 2013-14, they awarded 372 contracts, 258 of which were to companies based in Northern Ireland.  That represents 69% of the contracts awarded.  The approximate value of those contracts was nearly £260 million, almost £160 million of which was to companies based in Northern Ireland.  That represents 62% of the value of contracts awarded.  Although above-threshold contracts are advertised through the European journal in accordance with procurement legislation, I am happy to confirm that the majority of the remaining contracts were awarded to a mix of companies from Great Britain and to multinational companies with offices in Northern Ireland.